Finance & Grow Your New Business. Angie Mohr

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      Just because you are a hairdresser doesn’t mean you should start a salon. In this chapter, we’ll examine the pros and cons of different types of businesses.

      Introduction

      Starting a business can be scary, exciting, and fulfilling, all at the same time. Frequently, small businesses are started by people who have been employees in the same industry. For example, hair stylists often open salons and accountants start accounting firms. You may feel that because the industry you’ve previously worked in is familiar to you, you would be successful at starting a business in this industry.

      It’s important to keep in mind, however, that building a business, managing a business, and doing what the business does are three very different activities requiring different skill sets. You may be interested in doing only one of these three things. For example, you may get great pleasure out of hair styling, but have little patience for managing the day-to-day operations of a business. In this case, you will want to reconsider your decision to start a business. No matter how much joy it gives you to “be your own boss” while doing the thing that you do best, you will come to despise all the other tasks that go along with owning and managing a small business. On the other hand, you may love building the business: designing the office space, putting together the marketing plan, forecasting, and building the customer base. You may, however, be thoroughly bored with the management aspect or with doing what the business does. Entrepreneurs who feel this way tend to build a business, get it up and running, sell it, and start all over again. The thrill for them is in the creation process.

      If you plan to build your business, manage it, and be its chief employee, make sure that you have the energy and the skills to do all three of those things. If not, you will have to hire other people in those positions that you do not wish to do yourself, or rethink your business plan entirely.

      Once you have assessed your strengths and weaknesses in terms of building, managing, and operating a business, it’s time to look at your personal goals.

      Why Do You Want to Be an Entrepreneur?

      Before you jump with both feet into starting a business, take some time to examine your motivations. What is it that is driving you towards starting and running a business? Many small-business owners cite things such as more money, freedom, and empire building as their motivators.

      Money

      Owning and running a business has the potential for providing you with a higher level of investment return and remuneration than you would receive working for someone else. The profit potential is definitely there, but high profits are a trade-off for high risks. Starting a small business is a risky proposition and you, as the owner, face the potential for financial loss as well as gain. It’s important to keep this in mind as you build your business and make sure that you not only have the ability to survive failure, but also the ability to tolerate risk. We will examine business risk in greater detail in Chapter 9.

      When small-business owners talk about money, though, they often don’t mean that they want money for money’s sake. Money means something slightly different to each person, but in general, it represents financial independence, prosperity, and security. The more time you spend planning your business model before you begin, the more likely you will be building a profitable enterprise that will meet your personal financial goals.

      Freedom

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